Finance minister Enoch Godongwana has exempted the government’s marquee private sector partnership at the Durban Container Terminal Pier 2 (DCT2) from the Public Finance Management Act to reassure investors that red tape won’t stall the project.
The act is South Africa’s primary law governing financial controls in national and provincial government.
Godongwana gazetted the exemption on Tuesday, before the signing of the landmark 25-year partnership between Transnet and International Container Terminal Services Inc (ICTSI), a centrepiece of the country’s most far-reaching logistics reforms in a generation.
The exemption is for 25 years, the duration of the deal entered into between Transnet and ICTSI, signed on Wednesday in Durban, after a losing bidder’s protracted legal battle delayed the project.
According to the parties, the partnership, which is expected to come into effect in January, is expected to increase capacity at the terminal from 2-million to 2.8-million 20-foot equivalent units, representing a big lift for South Africa’s trade with the rest of the world.
Transnet group CEO Michelle Phillips said the multibillion-rand bid by ICTSI comes while DCT2’s performance has been improving.
“We expect that our partnership with ICTSI will further propel this crucial terminal to its full potential. Private sector participation (PSP) transactions are an important element of our strategy to modernise, expand and improve our key assets,” Phillips said.
“It is also a big step in our efforts to improve efficiencies across our terminals and transform our ports into world-class hubs. This is consistent with our approach to enhance efficiency and growth through strategic partnerships. Private sector participation in ports has the potential to positively influence efficiencies, export processes and global competitiveness.”
The infrastructure and design of DCT2 has remained the same since 1963. Over the past 20 years, congestion at the terminal due to shipping traffic and limited operational capacity have led to backlogs at the Port of Durban.
DCT2 is Transnet’s biggest container terminal, handling more than 65% of the Port of Durban’s throughput and 46% of South Africa’s port traffic.
The ICTSI deal is a flagship public-private sector partnership that will demonstrate how the private sector can work with state-owned enterprises.
ICTSI senior vice-president Hans-Ole Madsen said the group’s R11bn investment in the partnership is a vote of confidence in South Africa’s potential.
“Durban Container Terminal handles about 65% of South Africa’s containerised trade, making it critical to the nation’s economic vitality,” Madsen said.
“Our vision for Pier 2 is clear and ambitious. We will deploy state-of-the-art equipment, implement world-class operational systems and bring international best practices to transform this facility into a terminal South Africa can be proud of — one that competes not just regionally but globally.
“Transforming Pier 2 into a world-class facility is ambitious work that requires time and the co-operation of many stakeholders. But ICTSI’s global experience gives us confidence that, with the support of Transnet, the South African government, the port workforce, and the broader logistics community, we will achieve exceptional results.”
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